Salary to Hourly Rate: Which is Better for your Business

Many articles talk about the impact of working per hour or per project for freelancers. However, not many of them happen to study this effect in the companies that hire them.  We know that this is something that keeps many business owners skeptical when it comes to remote work. So, we want to tackle this effect in our of our most important group of clients, the ones on IT.

To make this analysis easier to digest and compare, we will split it into a competition. We will study the main points that interest most owners when considering changing a core element of the dynamics. In most cases, a clear victor will emerge, but in others, we will leave it to you to decide.  

Of course, we must clarify that both have advantages and disadvantages. So, do not be afraid to try it out and switch back in case it does work. But, to avoid any inconveniences, we wish to give you an oversight so, you may make an educated decision in the future. 

Join us in this exciting fight between remote employees’ most common payment systems. Let us decide who is the ultimate winner in the hourly vs project rates debate. 

Round 1: Money Investment – tie

The first stop we will make is the most popular one, how much money will you save or lose? The answer is quite simple; it will depend on how clear you are on your final goal. Most professionals will prefer to be paid upfront to deliver a finished product. Most clients tend to have a clear final goal in mind, whether it is an app, a website, or just a mapping study.

However, sometimes reaching that goal is not a straightforward path. You may need to take some detours to achieve your goal of getting to the finish line. Most professionals who charge per project won’t be too happy about deviating from the main path. That’s when the hourly paid system truly shines.

Working per hour is better when you are not 100% sure what you will need to reach a specific goal. You will have the chance to stretch or narrow the working hours of your teams as you see fit. You can also request extensions if you miss something or notice a new sidewalk you wish to add. If you were working per project, you would need to renegotiate the whole thing or even pay for a costly add-on to your original idea. Note that it can stack up quickly and make you lose even more money. 

But, if you are 100% sure of what you need, things get a turnaround. You can hire someone for a specific project and reap the benefits of having a professional do only one task. Word of advice, you will be wise to lead this effort to ensure that the contract goes precisely as planned. Hourly is the way to go if you don’t have the time or resources to supervise it personally. 

Round 2: Adaptability – Hourly

As we discussed, hourly projects tend to be much more flexible. Let us imagine for a moment that you are in the process of making a website. Everything is going according to plan, but you suddenly face an unexpected change of plans and require an app. If you paid for a project, chances are that if you paid for a whole project package, you wouldn’t be able to add it to your current bill.

But, with an hourly system, you just need to add or deduct the team members you require for the new task. You may also just switch the priorities of your current virtual team on the fly, and no penalties nor problems will arise. 

This is also somewhat true if you need to pause a project. Most contracts will force you to finish it (as you already paid) even if conditions are not there. However, hourly projects can be easily placed on hold and resumed when the correct time comes around. You may lose the people assigned to your project, but you may resume later with a new team ready to support you. 

Round 3: Task Management – Hourly

About point 2, task management becomes better when you split things into hours. Most professionals who work under projects tend to focus only on the primary goal. On one side, it is very positive as it saves time but may also create a considerable gap between the tasks and you. Chances are that you won’t get involved in the project as it will only slow it down. 

It is good if you lack the time or resources to manage a project. But, according to our experience, most business owners wish to learn the basics behind every step their company takes. This becomes even more important when we speak about the technical side of things. Most developers hate to touch the code that another one created. So, as the business owner, you should at least familiarize yourself with the nuances of each part of the software your company owns.

You should also learn how to handle the basics of the systems behind your company in case something fails. This is particularly important if you have a startup or a small business. If you have a big corporation under your belt, consider having someone on your internal team take this responsibility for you.

However, the undoubted winner of this round is the hourly system. 

Round 4: Autonomy – Project

Sadly, as the above is true, it is also the lack of autonomy of the hourly projects. If you lack time to follow each advance carefully, you should consider a per-project approach. As you know, hiring someone for a project is the same as paying for a product. So, you will only need to worry yourself when the deadline approaches.

It is also true that most project parts will remain a mystery, as you only need to concern yourself with the end goal. Complex companies benefit significantly from this modality, as they may have enough internal staff to deal with the product. Even if it is faulty, they can fix it by investing some time from their already hired professionals. 

Autonomy is a very crucial factor when it comes to managing a whole ecosystem that certain businesses have. An excellent example is a healthcare, an industry where the autonomy of each part of the business is vital for ensuring the proper results. 

Round 5: Synergy – Hourly

Another essential factor we have been hinting at is the synergy between your team and the one you hire. Hourly teams tend to be more open to cooperation than the hermetic per project team. When you pay per hour, it is easier to ensure that their task is to discuss each step. This cooperation translates into an overall more effortless experience.

It is a small but essential thing to consider when dealing with technology. Remember that code and software are very delicate, so that you will need the support of the building team. We don´t recommend just asking for software blindly, but you should always try to learn the backs of it.

It all comes back to your roadmap.

As you can see, there are obvious points for each method discussed here. The advantages and disadvantages are mostly situations for most projects out there. However, what is true is that you must carefully consider how you will approach the situation. You can solve many productivity problems if you select the proper way to channel your objectives.

Do not forget that there are also risks associated with working with freelancers vs. staffing agencies. Overall, you must design an action plan that considers all variables and offers a solution for your IT needs. We understand that this type of project is complicated by nature, and building them over the internet is not precisely easy. 

However, trust us when we say the correct way to go is remote, as it will always make things easier for you. We have had plenty of experience in helping others define their work plan before engaging in remote work. We offer hourly packages that give you more control over your dynamics and how you want to engage with your assistants. Let us help you decide the best course of action and find the balance to execute your projects.

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Salary to Hourly Rate: Which is Better for your Business

Many articles talk about the impact of working per hour or per project for freelancers. However, not many of them happen to study this effect in the companies that hire them.  We know that this is something that keeps many business owners skeptical when it comes to remote work. So, we want to tackle this […]